Tuesday, June 14, 2016

ICICI Bank applying Channels, Time Cycles, Bollinger Bands® and RSI!!

Recently Bank Nifty failed to show momentum above 18000 level and reversed on downside sharply. During such volatile market one should be ready with the trading strategy on different stocks. ICICI Bank is one from the private banking space which has been underperforming from medium term perspective and finding strong resistance in the zone of 258-260 level. What should be the trading strategy applying different techniques like Channels, Time Cycles, Bollinger Bands, RSI and Elliott wave? Below we have shown part of research taken from “The Financial Waves Short Term Update”which was published in the today morning.

ICICI Bank daily chart:

(Part of research is taken from The Financial Waves short term update report)

Wave analysis:

Bank Nifty failed to sustain above 18000 level and has moved lower towards 17600 in last session losing 1.3%. In last session prices also had Gap down opening and post that it has sustained below the same. So over short term as long as Gap down area is unfilled short term trend will remain negative. During such kind of trading environment one should use selling strategy in stocks which has reversed from the crucial resistance zone and ICICI bank is one of them.

The above daily chart indicates that as compared to other private banks, this stock failed to show any deeper retracement on upside and still trading way below its 52 weeks highs. This suggests that this stock is underperforming. As per wave perspective, the rally from the low of 180 to 260 is corrective in nature which suggests that another wave…… of third standard correction is ongoing.

During the range bound market Bollinger Bands works well. Recently prices tested the upper band of as shown on daily chart and reversed on downside sharply. RSI has also reversed from 70 level which was previous resistance and hence downside correction from here may have started. Apart from that 68 days topping Time Cycle is also due which has formed important tops in past. Hence one should be cautious now.

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